EDC

Trinidad and Tobago questioning involvement with SNC-Lavalin

(August 21, 2013) Officials in Trinidad and Tobago are reconsidering the country’s involvement with corruption-plagued engineering firm SNC-Lavalin.

By Brady Yauch for Probe International

Officials in Trinidad and Tobago are reconsidering the country’s involvement with corruption-plagued engineering firm SNC-Lavalin and a potential deal with the company to build a $163-million hospital complex in the Caribbean country.

According to a recent report in the Guardian, Trinidad and Tobago’s Housing Minister, Dr. Roodal Moonilal, admitted that the country is concerned about the possibility of awarding an expensive contract to SNC-Lavalin in light of the corruption allegations surrounding the company. To date, a special purpose company under the T&T Housing Ministry, the Urban Development Corporation of T&T (UDeCOTT), has signed a contract with SNC-Lavalin for the design phase of the hospital, which Moonilal says cost TT$2.2 million.

But a decision on the much more lucrative second phase of the project, which involves actually building and equipping the hospital, has yet to be made. Moonilal says Trinidad and Tobago – in response to the controversy that has erupted regarding SNC-Lavalin’s involvement in the hospital contract – may move to review its relationship with the company for the second phase.

“It may involve asking the Canadian government to select another contractor which we may feel more comfortable with, given all the circumstances but that is a decision that the UDeCOTT board has to address,” Moonilal said. “I have mandated the UDeCOTT board to review the arrangement with the Canadian government and the role of SNC Lavalin in the future of the hospital project.”

In June, news broke in the T&T press that SNC-Lavalin had been awarded a contract to design a hospital and rehabilitation complex in the town of Penal, on the recommendation of the Canadian Commercial Corporation (CCC). The little-known CCC is Canada’s international contracting and procurement agency; it sources Canadian goods and services on behalf of governments in other countries while “avoiding the otherwise lengthy international tendering process.”

Dr. Moonilal says he expects the ongoing due diligence review – which CCC says is assessing the firm’s financial, managerial and technical abilities as well as its Corporate Social Responsibility capabilities – to determine whether SNC-Lavalin is eligible for the contract will be completed by this week.

Nevertheless, Dr. Moonilal took steps to distance the government from SNC-Lavalin, denying that it is “involved in a multimillion-dollar deal” with the company. Although Trinidad and Tobago has concerns over working with SNC-Lavalin, he said, a final decision on whether the company should be allowed to build the hospital won’t be made until the due diligence review is completed.

The President and CEO of CCC, Marc Whittington, meanwhile, is defending the agency’s involvement in the controversial project, insisting that it has arranged a financing package with interest rates “that are very competitive and are in fact lower than what would be considered general commercial rates.”

He added that “although the exact terms and details are not available as the financing has not been finalised, it is clear that a government-to-government arrangement with the Canadian government will continue to offer financial advantages to T&T as the involvement of the CCC and possibly other Canadian agencies often results in lower interest rates and preferential conditions in the financing package.”

This confirms the T&T government’s understanding that CCC would deliver preferential financing for the scheme. But it appears to contradict statements by CCC officials in email correspondence with Probe International that the contract would not deliver subsidies courtesy of the Canadian taxpayer, but “will be funded through commercial terms.”

As Probe International laid out in a recent article, the behind-the-scenes move by the Crown corporation to secure the deal has led many lawmakers and industry leaders in T&T to cry foul and has given Canada’s reputation a black eye.

Trinidadians have called into question the wisdom of dealing with a company that is under investigation for bribery and corruption scandals in half a dozen countries. SNC-Lavalin’s former CEO Pierre Duhaime and former executive vice-president Riadh Ben Aissa are accused of various infractions including bribery, fraud, and money-laundering involving, among others, a contract to build the McGill University Health Centre and payments to the Gadhafi family for lucrative infrastructure contracts. The two have been formally charged with fraud in relation to the McGill Health Centre project.

The World Bank recently slapped a 10-year ban on the company after an investigation into bribery in Bangladesh and Cambodia, with the regional multilateral banks and Canada’s own former aid agency, CIDA, following suit and declaring they too would not contract with Canada’s engineering giant.

Unsurprisingly, T&T legislators are troubled by the fact that the Canadian government is using crown agencies to promote new untendered, closed door contracts for a company that awaits trial for corruption and bribery on old contracts.

Brady Yauch is an economist and Executive Director at Consumer Policy Institute.

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